Capital Gains Tax: Selling Property in Turkey as a Foreigner

Living abroad offers expats new opportunities, but navigating foreign tax systems can quickly become complicated. As a foreigner selling property in Turkey, understanding capital gains tax (CGT) is essential. Without proper knowledge, you could face unexpected liabilities that impact your financial plans. This guide will help you make informed decisions and ensure compliance with Turkish tax laws.

Understanding Capital Gains Tax in Turkey

Capital gains tax in Turkey applies when you sell a property for more than you paid. The profit—minus allowable expenses—is subject to tax. However, not every property sale results in a tax obligation. There are specific exemptions and thresholds that can reduce or even eliminate your tax burden.

• Applies to real estate sold within five years of purchase
• Automatically waived if property held over five years
• Indexed purchase price helps adjust for inflation
• Tax is calculated using a progressive rate

For example, if you bought an apartment in Antalya in 2020 and sell it in 2024, CGT applies. But if you wait until 2026, the five-year rule exempts you. This exemption is one of the most strategic tools for long-term investors.

How to Calculate Capital Gains

Understanding how CGT is calculated can help you forecast your obligations. The gain is the difference between your inflated purchase cost and your sale price, minus applicable expenses.

• Original purchase price (in Turkish Lira)
• Adjusted using the Domestic Producer Price Index (D-PPI)
• Include notary and title deed transfer fees
• Deduct renovation and improvement costs

Suppose you bought a villa for 1,000,000 TL and sold it for 1,400,000 TL after three years. If permitted expenses total 100,000 TL and D-PPI adjustment raises your cost basis to 1,100,000 TL, your taxable gain becomes 200,000 TL. This amount is then taxed using Turkey’s marginal income tax rates.

Exemptions and Special Cases

Turkey’s tax system offers key exemptions that benefit foreign investors. These can significantly offset your liabilities when applied correctly. While the five-year exemption is the most common, other exemptions apply under specific conditions.

• No tax due if property held more than five years
• Inheritance or transfer within family often tax-exempt
• Primary residence exemption not extended to non-residents
• Lower gains may fall under annual exemption threshold

If your gain falls below the annual CGT exemption threshold, which adjusts yearly for inflation, you owe nothing—even if the five-year rule doesn’t apply. In 2024, this threshold is 55,000 TL. Filing your annual return correctly ensures you benefit from this provision.

Required Documents and Filing Process

Timely filing and accurate documentation are crucial. As a foreigner, you’re expected to comply just like local property owners. Reports must be submitted to the local tax office where the property is located.

• Purchase and sale contracts with notarized translations
• Title deed copies (Tapu)
• Proof of purchase and sale payments
• Invoices for renovations and improvements
• Calculation of inflation-adjusted cost basis

Returns are typically filed in March for property sales completed in the previous year. If you sold your property in July 2023, your return should be filed by March 2024. Missing this window could result in penalties and interest.

Tips for Foreign Sellers

Foreigners can manage Turkish CGT more efficiently by adopting a proactive approach. Prior planning minimizes risks and reveals opportunities for savings. With a proper understanding of local obligations, you can structure your property sale to align with financial goals.

• Track purchase date carefully for five-year exemption
• Keep digital and paper records of all related transactions
• Hire a licensed accountant familiar with Turkish tax law
• Avoid under-declaring property values to reduce CGT issues
• Consider timing your sale to fall after the five-year mark

Many expats retain properties for long-term rental income or holiday use. If you plan to resell, mark your Tapu acquisition date and monitor it closely. Exiting the investment even a month early may lead to high tax consequences that could have been avoided.

In summary, understanding Turkey’s capital gains tax helps you align your property decisions with long-term financial strategy. By keeping accurate records, following local legal practices, and leveraging exemptions, you can maximize returns and reduce unnecessary expenses. Knowledge and timing give you the edge when selling Turkish property as a foreigner.